Regulations Amending the CCOFTA Rules of Origin Regulations: SOR/2023-44

Canada Gazette, Part II, Volume 157, Number 7

Registration
SOR/2023-44 March 9, 2023

CUSTOMS TARIFF

P.C. 2023-189 March 9, 2023

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Regulations Amending the CCOFTA Rules of Origin Regulations under subsection 16(2)footnote a of the Customs Tariff footnote b.

Regulations Amending the CCOFTA Rules of Origin Regulations

Amendment

1 The portion of section 1 of the CCOFTA Rules of Origin Regulations footnote 1 before paragraph (a) is replaced by the following:

1 The following provisions of the Free Trade Agreement between Canada and the Republic of Colombia, signed on November 21, 2008, as amended from time to time in accordance with Article 2302 of that Agreement, have the force of law in Canada:

Coming into Force

2 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

In August 2021, Canada and Colombia agreed to amend provisions related to the rules of origin set out in the Canada–Colombia Free Trade Agreement (CCOFTA). The domestic implementation of these changes requires amendments to the CCOFTA Rules of Origin Regulations. A separate regulatory process for such technical amendments is cumbersome, given prior parliamentary engagement and Governor in Council approval over CCOFTA treaty amendments. As a result, the amendments will also simplify the future domestic implementation process of any future rules of origin amendments by making such changes automatic through cross-reference.

Background

In free trade agreements (FTAs), rules of origin provisions are used to determine whether a good has undergone enough production in the free-trade area to be eligible for preferential tariff treatment. Given the updates every five years to the Harmonized System (HS), an international nomenclature system for the classification of goods under the responsibility of the World Customs Organization (WCO), all of Canada’s FTAs, including the CCOFTA, include a requirement to update the rules of origin provisions to reflect newer versions of the HS. These updates are negotiated between FTA partners. The rules of origin provisions of the CCOFTA are based on the 2007 version of the HS. Through an exchange of letters signed in August 2021, Canada and Colombia agreed to changes that reflect the 2012 and 2017 updates to the HS. To make these changes effective under Canada’s Customs Tariff, amendments are necessary under the CCOFTA Rules of Origin Regulations to implement the agreement with Colombia.

Objective

Description

The Regulations Amending the CCOFTA Rules of Origin Regulations amend the current CCOFTA Rules of Origin Regulations to implement the updated rules of origin provisions agreed to by Canada and Colombia, which are based on the 2012 and 2017 updates to the HS. In addition, the phrase, “as amended from time to time in accordance with Article 2302 of that Agreement” means that these types of technical amendments to the CCOFTA will automatically be implemented in the CCOFTA Rules of Origin Regulations as of the entry into force of the CCOFTA changes, as opposed to requiring further approval by the Governor in Council.

Regulatory development

Consultation

Consistent with other FTA negotiations, the Government maintained an open dialogue with the public and private sector stakeholders throughout the negotiations of technical updates with Colombia, notably through the holding of a 30-day consultation period by publishing a notice informing interested stakeholders of the proposed amendments in Part I of the Canada Gazette and the Global Affairs Canada website on March 14, 2020. No comments were received as a result of the Canada Gazette process. The regulatory changes were not prepublished in Part I of the Canada Gazette, given the consultations held to inform the negotiations in 2020, the absence of impacts on existing market access granted under the CCOFTA of the updates to the rules of origin, and the approval of the CCOFTA treaty amendments by Parliament.

Modern treaty obligations and Indigenous engagement and consultation

An assessment of modern treaty implications did not identify any adverse impacts on potential or established Aboriginal or treaty rights, which are recognized and affirmed in section 35 of the Constitution Act, 1982.

Instrument choice

The Regulations Amending the CCOFTA Rules of Origin Regulations fully implement Canada’s negotiated rules of origin commitments under the CCOFTA and are necessary for importers to be able to continue to claim preferential tariff treatment under the CCOFTA. Regulations are the only instruments for achieving Canada’s international commitments in respect of these matters. Amendments will also simplify similar updates in the future and minimize the need for further regulatory amendments.

Regulatory analysis

Benefits and costs

The amendments to update the rules of origin are non-discretionary, consequential regulations with no direct cost impact to importers. The changes implemented by these Regulations are technical and revenue neutral in nature, relating to the periodic update of the HS. There is no change expected in the level of preferential trade resulting from these changes. The agreed updates are trade-facilitative and transparent as they provide an agreed interpretation of the updated rules of origin between Canada and Colombia.

Any amendments to the rules of origin provisions of the CCOFTA, like changes to Canada’s other FTAs, must be tabled in Parliament as required pursuant to the Policy on Tabling of Treaties in Parliament and be ratified by the Governor in Council to come into force. Changes to the Regulations to cross-reference future similar updates to the CCOFTA rules of origin would make these changes automatic, streamline the approval process, and minimize government administrative costs while not impacting transparency or stakeholder engagement in future rules of origin updates to the CCOFTA.

Small business lens

Analysis under the small business lens concluded that the Regulations will not impact Canadian small businesses. The regulatory amendments update the CCOFTA Rules of Origin Regulations to reflect a newer version of the HS. There is no change (increase or decrease) in the amount of administrative or compliance burden imposed on business as a result of the Regulations.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on business and no regulatory titles are repealed or introduced. The amendments to the CCOFTA Rules of Origin Regulations do not make changes to the requirements already in place for importers who wish to claim CCOFTA tariff preferential treatment when importing eligible goods from Colombia, including the required customs forms.

Regulatory cooperation and alignment

These Regulations are not related to a work plan or commitment under a regulatory cooperation forum. They are necessary for Canada to fulfill its commitments under the CCOFTA, which is an international agreement.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified.

Implementation, compliance and enforcement, and service standards

The Regulations come into effect on the date they are registered. The Canada Border Services Agency (CBSA) will monitor compliance with the terms of the CCOFTA Rules of Origin Regulations in the normal course of its administration of customs and tariff-related legislation and regulations. As was the case for previous updates to the rules of origin in other free trade agreements, the CBSA will inform importers through a Customs Notice of all relevant issues pertaining to the Regulations Amending the CCOFTA Rules of Origin Regulations.

Contact

Karen LaHay
Senior Economist
International Trade Policy Division
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Email: tariff-tarif@fin.gc.ca